Research in CEO communication has examined how CEOs’ use of language influences investor reactions. Specifically, this research empirically suggests that investors generally react negatively to CEOs’ use of abstract language. However, implicit leadership theories and stereotypes in communication suggest that CEOs’ language is expected to align with the masculine stereotype of abstract communication. This raises an interesting paradox: on the one hand, CEOs’ leadership stereotype is associated with abstract communication, while on the other hand, CEOs’ use of abstract language in communication is evaluated negatively by investors. Thus, research has yet to examine the boundary conditions, for whom and under what conditions, the CEOs’ extent of use of abstract language is evaluated negatively. Drawing on language expectancy and information processing under uncertainty theories, I hypothesize that investor reaction to CEOs’ use of abstract language is influenced by CEO gender since evaluators process the information from men and women CEOs differently. Further, firm characteristics such as performance and diversity-valuing practices influence the reliance on heuristics for information processing and evaluation. I apply textual analysis of quarterly earnings calls (Q&A section) of S&P 500 firms between 2010 and 2021 and examine the difference in stock market reactions to abstract communication between women and men CEOs. This study offers important theoretical insights on how gendered evaluation of CEO language influences organizational outcomes. Empirically, the study applies a novel linguistic approach (natural language processing using generative pre-trained transformer (GPT) models) to capture the CEO’s communication style.
